what’s happening out there?mseca.org/media/gt13conbobrenkes.pdfwhat’s new at pei • rp200 –...

What’s Happening Out There?

Bob Renkes Executive VP | General Counsel

Petroleum Equipment Institute

Tulsa, OK

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2013 GTEC Convention February 23, 2013

Savannah Marriott Riverfront Hotel

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Agenda

• About PEI

• Business Conditions

• Industry Issues/Opportunities • DEF

• ULSD

• Ethanol – E10; E15; E85

• Stage II Vapor Recovery

• CNG

• EPA UST Regulations

Agenda (…Con’t)

• What’s New at PEI • Recommended Practices

• Directory

• PEI Journal

• PEI Convention

• Questions/Comments

About PEI

Business Conditions

• 2011 Data

• October 2012 Survey

• February 2013 Impressions

Typical

PEI Distributor

Net Sales/ $254,004 $282,801 Employee Gross Margin 29.8% 28.2% Percentage

Operating Expense 27.7% 21.8% Percentage Personnel Expense 16.9 14.7

Operating Expense 10.8 7.1 Profit 2.0% 7.0%

ROA 5.8% 23.1%

High Profit

PEI Distributor

Where Did the Distributor Go?

• 2 Bankrupt

• 4 Purchased

• 1 Left the Industry

• 4 Closed Up Shop

• 1 Resigned

• 6 Didn’t Pay Dues

Business Conditions as of

October 6, 2012

6.8

Projection for 2013

7.3 (2013) vs.

6.8 (2012)

What’s Going Well?

• Construction: 25%

• Service, Inspections, Testing: 20%

• Sales: 15%

• Upgrades/Remodels: 13%

• CNG: 7%

• DEF: 6%

• Less Competition: 3%

What Is Disappointing?

• Margins/Profitability: 33%

• Labor/People: 13%

• Manufacturer Issues: 12%

• Economy/Gov’t/Banks: 11%

How optimistic are you on your company’s

prospects through 2017?

• Extremely Optimistic: 8%

• Very Optimistic: 40%

• Moderately Optimistic: 50%

• Ambivalent: 2%

• Somewhat Pessimistic: <1%

• Very Pessimistic: 0%

• Extremely Pessimistic: 0%

Recent Anecdotal Information

• Tampa

• Committees

• Las Vegas

Industry Issues/Opportunities

• DEF

• ULSD

• Ethanol – E10; E15; E85

• Stage II Vapor Recovery

• CNG

• EPA UST Regulations

DEF

• Truck stops – Nearly 1,000 dispensing DEF • Loves – 158/234 = 234 by end of 2012

• Pilot – 325/550 = 375 by end of 2012 = 550 by end of 2013

• TA – 103/150 = 150 by end of 2012

• 3,000 Truck Stops • 1/3 are already there

• 1/3 will be there in the next 18 months • 1/3 will never be there

• Commercial locations

• Conclusion: 2013 will be big for DEF

ULSD

• Phase I Conclusions

• Phase II Efforts

• What’s next? What to do until then?

Corrosion in Systems Storing and Dispensing

Ultra Low Sulfur Diesel (ULSD), Hypotheses

Investigation (146 pages)

www.pei.org or www.clean-diesel.org

Hypotheses From Phase I

ULSD stored in underground storage tanks is

contaminated with ethanol, and the ethanol is oxidized

by Acetobacter into acetic acid which is diffused

throughout the vapor and liquid space causing severe

and rapid corrosion of metals associated with ULSD

systems at retail stations. It is hypothesized that the

presence of ethanol in USTs storing ULSD is the result

of switch loading or from legacy retail sites whose

ventilation system remains intact allowing ethanol

vapors to back feed into the ULSD tank.

Questions For Phase II

• What are the other possible sources of contaminants that can lead to acetic acid formation? Where do they enter the system and contaminate the ULSD?

• Find a “clean site” to run tests

• Run tests upstream (bulk plants and terminals)

• Pulls samples from locomotive fuel tanks, tank trucks, saddle tanks

• What about non-retail stations?

What’s The Next Step?

What Should We Do Until

We Figure This Out?

Ethanol

• Problems with E10

Stagecoach 800023 Prem. Sump

Mar. 2010 Aug. 2010

Ample ethanol in vapors

Water condensing on

fixtures

Ample production of

ti idacetic acid

Extensive corrosion

800023 Premium Sump Water Vapor Samplers

mg/L mg/L

Eth l N S l 14850Ethanol No Sample 14850

Acetic acid No Sample 125

Benzene No Sample 1

Total BTEX No Sample 21

no standing water, STP 2 years old, pH condensate 5.3

Ample ethanol in vapors

Water condensing on

fi tfixtures

Ample production of

acetic acidacetic acid

Corrosion

800128 Premium Sump Water Vapor Samplers

mg/L mg/L

Eth l N S l 24000Ethanol No Sample 24000

Acetic acid No Sample 778

Benzene No Sample 2

Total BTEX No Sample 10

no standing water, STP 2 years old, pH condensate <4

A l th l iAmple ethanol in vapors

Water condensing

on fixtureson fixtures

Ample production

of acetic acidof acetic acid

Corrosion

800128 Regular Sump Water Vapor Samplers

mg/L mg/L

Eth l N S l 13700Ethanol No Sample 13700

Acetic acid No Sample 667

Benzene No Sample 2

Total BTEX No Sample 5

no standing water, STP 2 years old, pH condensate <4

Ample ethanol in p e et a o

vapors

No water

Little acetic acid

N iNo corrosion

18 DOT E85 Gasoline Sump Water Vapor Samplers

mg/L mg/L

Eth l N S l 1340Ethanol No Sample 1340

Acetic acid No Sample 0.332

Benzene No Sample 0.002

Total BTEX No Sample 0.030

Minimal ethanola et a o

in vapors

No water

No acetic acid

N iNo corrosion

560100 Premium Sump Water Vapor Samplers

mg/L mg/L

Eth l N S l 24 3Ethanol No Sample 24.3

Acetic acid No Sample <0.005

Benzene No Sample 0.13

Total BTEX No Sample 1.41

no water, STP 4.5 years old

Minimal ethanol

in vapors

Adequate water

Little acetic acid

Normal amount ofNormal amount of

corrosion

800023 7 Regular Sump Water Vapor Samplers

mg/L mg/L

Eth l 1 87 12 21Ethanol 1.87 12.21

Acetate or Acetic acid 1.34 2.07

Benzene 0.22 0.72

Total BTEX 2.59 6.36

7" water, STP 2 years old, pH 5.8

A link exists between

ethanol in motor fuels andethanol in motor fuels and

the corrosion of metals in

th fthe sumps of an

underground storage tank.

In the summer, the contents of a UST tend to be cool

with respect to the atmosphere. There is a tendency

for water to condense from the air onto cool metal

fixtures in a sump The sump can also collectfixtures in a sump. The sump can also collect

precipitation.

The vapors in the ullage of the UST contain high

concentrations of ethanol.

If the vapors escape the UST, they can dissolve in

t di t i th i t th t hstanding water in the sump or in water that has

condensed on metal fittings.

Acetic acid bacteria can use oxygen

f th t h t idlfrom the atmosphere to rapidly

transform the ethanol to acetic acid.

2 CH3CH2OH + O2 2 CH3COOH + 2 H2O

The acetic acid produced by p y

biological degradation of ethanol can

facilitate the corrosion metals.

Corrosion Characteristics

• Severe STP sump corrosion occurs

in sumps with limited ventilation.p

• Corrosion deposits have globular

shape (tubercles) which could beshape (tubercles) which could be

indicative of MIC.

• Corrosion rate seems related to• Corrosion rate seems related to

sump temperature.

Corrosion Rate Related to Temperature

L ft t Ri ht C t l Wi i S O t DLeft to Right: Control, Wire in Sump Oct.-Dec.,

Wire in Sump 2 weeks in Aug.

Controlling STP Sump Corrosiong p

• Detecting & Reducing vapor leaks• Detecting & Reducing vapor leaks

• Use more corrosion resistant stp

tcomponents

• Improve STP sump ventilation

• Corrosion resistant coatings

examples: Tape Coat TC-7100 or 3M p p

323

• BiocidesBiocides

• Fuel additive: corrosion inhibitor

How serious is the STP sump

corrosion?corrosion?

STP sump picture from Edwin C. French IV, p p ,Senior Env. Compliance Specialist, Storage Tank Section, Leon County, Florida

Corrosion on vapor sampler wire in sump

for 66 days compared to control wirefor 66 days compared to control wire.

Corrosion on vapor sampler wire in sump for

66 days compared to control wire, notice the

globular shape deposits.

SUMMARY

Rapid corrosion has been observed in somep

ethanol blended gasoline stp sumps with

limited ventilation; these sumps contain high p g

ethanol vapor concentrations with microbial

activities forming acetic acid. Water g

condensate and temperature appear to

influence rate of corrosion. Future studies

need to be performed to determine the

severity of the stp sump corrosion, and best y

ways to control the corrosion.

QUESTIONS/BRAINSTORMINGQUESTIONS/BRAINSTORMING

Ethanol

• Future of E15 • Political: “All of the above plan” – 2/12/13 SOU address

• Political: API: Repeal RFS

• Political: Is a divided Congress interested in RFS repeal?

• Potential impact on vehicles – AAA

• Potential impact on corn prices

• Potential impact on station owner liability

• Blend wall issues

• Underground compatibility issues

• The Bottom Line

Underground Compatibility Issues

• EPA Guidance July 5, 2011

• >E10 and >B20

• Federal law: “Owners and operators must

use an UST system made of or lined with

materials that are compatible with the

substance stored in the UST system.”

UST Components That Must Be Compatible

• Tank or internal lining

• Piping

• Line leak detector

• Flexible connectors

• Drop tube

• Spill and overfill prevention equipment

• Submersible turbine pump and components

• Sealants (including pipe dope and thread sealant, fittings, gaskets, o-rings, bushings, couplings and boots)

UST Components That Must Be Compatible

(…Con’t)

• Containment sumps (including submersible

turbine pumps and under-dispenser

containment)

• Release detection floats, sensors and

probes

• Fill and riser caps

• Product shear valve

Three Options for Meeting the Compatibility Requirement

• Use components that are certified or listed by a

nationally recognized, independent testing

laboratory for use with the product stored;

• Use components approved by the manufacturer

to be compatible with the fuels stored; or

• Use another method determined by the

implementing agency to sufficiently protect

human health and the environment.

Acceptable Form for Manufacturer Approval

• In writing

• Affirmative Statement of Compatibility

• Range of biofuels the equipment is

compatible with

• From the manufacturer itself.

UST Component Compatibility Library @ www.pei.org

Ethanol

• Future of E15 • Political: “All of the above plan” – 2/12/13 SOU address

• Political: API: Repeal RFS

• Political: Is a divided congress interested in RFS repeal?

• Potential impact on vehicles – AAA

• Potential impact on corn prices

• Potential impact on station owner liability

• Blend wall issues

• Underground compatibility issues

• The Bottom Line

Stage II Vapor Recovery

Stage II Vapor Recovery Map

Covers 30,600 stations in 19 states and Washington D.C.

Stage II Vapor Recovery

• Atlanta metro only

• Vermont – New Hampshire – Maine already started

• Connecticut – Ready to get started

• St. Louis starts March 17

• Texas, Louisiana, Tennessee, Atlanta, Pennsylvania, Indiana have the ball rolling

RP300

CNG

New EPA Regulations

• Will they happen?

• When will they happen?

• When will it impact my business?

Retail Customers

• Relatively healthy

• Station churn

• 62% is holding

• New builds/upgrades

Transportation Fuels of the Future

• Good for our industry

• Tough on our customers

National Objectives

• Reduce U.S. reliance on foreign oil

• Increase efficiency (CAFE Standards)

• Transition to non-petroleum-based energy sources

Uncertain Process

• Leadership changes/decisions amended

• Technologies are developed

• Previous assumptions wrong and/or irrelevant

• Regular Gasoline

• E10

• E15*

• E85

• E?*

• CNG

• Electricity

• DEF

• LNG

• Diesel

Transportation Fuels of the Future

EMV

• Europay Mastercard Visa

• Two important deadlines • October 1, 2015: Liability shifts to merchants for in-store

fraudulent credit card transactions

• October 1, 2017: Dispensers are either EMV compatible or marketer accepts resolving potential liability if they don’t

What’s New At PEI

• RP200 – Installation of ASTs – March 4 in Chicago

• RP800 – Installation of Bulk Plants – March 18 deadline

• RP1300 – Fixed Base Airports

• RP1400 – Installation of Emergency Generator Systems – February 26-27 meeting in Memphis. Available 2013.

• RP1500 – Installation of CNG Refueling Equipment – April 23-24 meeting in Baltimore. Available 2014.

• RP900 – Inspection & Maintenance of UST Systems – After the new federal UST rules come out

Directory

Convention

PEI Journal

Questions/Comments?